I am back from spending a week in China attending the World Economic Forum meeting in Dalian as CEO of FON and the following are my thoughts on China, the Chinese Communist party and the future of China.

On Being Communist

China calling itself Communist is like Latin-American countries calling themselves Catholic. The Communist Chinese seem to like money as much as the Catholics Latinos like sex and yet both have "ideologies" whose main principles are based around repression of what those cultures enjoy. Maybe it is unsuccessfully trying to fight these "sinful" desires that makes these cultures come up with ideologies that are so far from their own reality of life. You are as unlikely to find a Chinese who believes in sharing his wealth as you are to find a Brazilian who practices abstinence.

On High GDP Growth Rates

China's extremely high GDP growth rates are as unrealistic as those of my native Argentina during the '90s. Argentina was growing at 9 percent per year in the '90s because it was borrowing enormous amounts of money that it then failed to pay leading to the largest default in human history ($220 bn). China's growth comes with the added cost of destroying both its own country and the planet as a whole through carbon emissions. Moreover this growth is accompanied by tremendous inequities greater than those common in USA, which is already the most inequitable of the large economies of the world. China's development is partly based on borrowing against its own future. This morning when I left Beijing it was another "sunny day" but you could not see beyond 400 meters because of a perennial pollution cloud that is always on top of the city. If the externalities of Chinese growth were counted in their measures of GDP Chinese growth would be significantly lower. Don't expect athletes to break any records during the Olympics, except maybe Chinese ones who are used to the pollution.

On Democracy and the Communist Party

I can understand that the Chinese Communist Party argues that if China introduced democracy now the result would be chaos. Until my recent trips to China I thought differently but now I believe that the "Communists" are right. China is a nation of mostly one-child families who raised a generation that seems to be extremely selfish and unruly. One of the simplest demonstration of this is watching traffic in Beijing. What stands out the most about driving in China is how every driver seems to believe that the road is a competition track to get ahead of others and if that includes running over pedestrians or the few cyclists left in China, so be it. To me, the roads of China are an image of what would happen if the country adopted democracy now. It would probably disintegrate into a lot of small and corrupt regional parties who would make China worse off than now. Everyone would try to gain advantage over anyone else, it would be like capitalism without the basic welfare state and anti-trust rules that are needed to prevent capitalism from becoming the "winner takes all game" that destroys society. While I strongly dislike totalitarian states, I do endorse the Chinese slow progression towards liberalization and democracy.

On the Communist Party Control of the Media

While I understand that the Chinese Communist Party wants to preserve itself in power and I believe that this is necessary for a few more decades, I think that some of their actions are absurd and counterproductive, especially their control of the media, the press and the internet. In my view the biggest hope for the Communist Party has to preserve itself in power is to convince its citizens that it deserves to stay in power rather than just lying their way into it. If "communists" were able to convince me, a pro-democracy visitor, that they should stay in power (Iraq is a good proof that democracy is not the best system for everyone) I don't see how they can't convince their own new middle classes that this is the case. Instead if they keep controlling the internet, lying and so on, any spark will start the next Tiananmen.

China's Love Affair with Big Cars

I am shocked that the Chinese government chose a development model based on big cars, as cars are made mostly by foreign companies using foreign raw materials and powered by foreign oil. Cars are destroying China. China has now only one car per 20 people. The USA almost has one car per person. China just can't afford to achieve American levels of car ownership as it cannot afford to pay for all the imported oil, ore, roads and other materials needed to make and maintain cars. China had one great thing going for it and that was bicycles. What happened? Why is not China pushing for electricity based transportation systems baffles me. China could lead the world in non-oil based transportation but it does not. China could also opt for small cars, a la Smart, but they don't. Moreover, relying on oil ultimately means for China relying on the United States to protect China as the USA is the only global power with the resources to act militarily in the oil producing regions of the world.

On Using Coal to Generate Electricity

One of the main reasons why every day is a cloudy day in formerly sunny Beijing is coal. And what is worse is that China has a lot of coal. In its rush to grow, China is creating many environmental dumps as what the Chinese do is instead of mining coal they blast it off the ground. What are the other choices? In my view they are: widespread adoption of solar energy including home based solar heaters of the kind that are very common around the Mediterranean, widespread adoption of wind power in the right areas as Spain and Germany have done, a great deal of investment in nuclear plants who in spite of all their problems as France has shown they are the only ones who can provide the massive levels of electricity that China needs for homes, businesses and should also need for transportation.

On the Chinese Dislike of Their Own Brands

Another issue that China has to deal with is the dislike of the Chinese for Chinese brands. As nationalistic as the Chinese may look to some, to me they seem insecure about their own identity and in love with foreign brands to a level that I have not seen in the other successful economies of Asia. The Japanese love their own brands, the Koreans love their own brands, the Chinese love all brands but theirs. To the Chinese, consuming their own brands seems to be a sign of failure. As soon as they have some money, Chinese consume European, Korean, Japanese and a few American brands. But the paradox here is that these are the same Chinese who make the products for the foreign brands. Look at where Sony products are made and you will see what I am talking about. They are mostly made in China. The Chinese strong dislike for the Japanese seems to end.... when they go shopping. Personally I think it's great to like all brands. But to particularly dislike your own brands means that your country is destined to supply commodity labor for foreign companies so they can profit selling your products again to you at high profit. This must change for China to develop. The Chinese have to learn to trust and love their neighbor's labor.

So, my conclusion after spending a week in China is that China has made tremendous progress since my first visit to that country in 1988. In spite of having a one-party system, China is a much freer country now that in the times of Mao and is making a lot of progress in many different areas including art. Unfortunately a lot of this progress is in the wrong direction, as China tries to become another USA and the planet cannot afford that. China is a house that is being built with structural flaws; at some point, it may need to be torn down and rebuilt again at great economic and social costs (e.g. ban cars as they recently banned scooters in Beijing). Instead, if the Chinese Communist party took advantage of its "dirigisme" to steer the nation away from cars, coal, and deception it could do a great deal of good for the future of the Chinese.